Federal student loan borrowers in the Saving on a Valuable Education (SAVE) plan are facing a turning point. As of Aug. 1, 2025, interest began accruing again on these loans, even though legal and policy changes are still unfolding.

That timeline puts pressure on borrowers to decide whether to move to another repayment plan, stay put for now, or wait for a new option that is still in development.

Key Changes

Although SAVE is being phased out, the program has not vanished overnight. Instead, interest will resume, and borrowers must decide how to handle their repayment strategy in light of three key realities:

1. Interest began accruing on Aug. 1, 2025.

2. Some income-driven repayment (IDR) plans remain open for enrollment.

3. A new Repayment Assistance Plan (RAP) is expected to start in 2026.

Your decision affects not only your monthly budget but also your timeline to potential loan forgiveness.

Your Main Options

Borrowers currently in SAVE payment-pause period generally have three strategic paths:

– Switch now to a different IDR plan and resume progress toward forgiveness.

– Do nothing for the moment and remain in SAVE payment-pause period while interest accrues.

– Wait for RAP to launch in 2026 and then compare that option with existing plans.

None of these is universally “best”; the right choice depends on income, career plans, and distance from forgiveness.

Switch To Another IDR

The program administrator has reopened applications for several IDR plans that can substitute for SAVE. These include:

Income-Based Repayment (IBR):

Payments are generally 10% or 15% of discretionary income, with a cap so they never exceed what you would owe under the 10-year standard plan. The repayment term is 20 or 25 years, depending on when you first borrowed. In many cases, eligibility rules are broader than they used to be, so some borrowers who were ineligible before may now qualify.

Income-Contingent Repayment (ICR):

Payments are the lesser of 20% of discretionary income or what you would pay on a 12-year fixed plan, adjusted for income. The repayment period is 25 years. This plan is typically used for certain loan types that do not qualify for other IDR options.

Pay As You Earn (PAYE):

Payments are 10% of discretionary income, capped by what you would pay under the standard 10-year schedule. Forgiveness generally arrives after 20 years of qualifying payments.

Some forgiveness-related processing has been slowed while systems and records are updated. To avoid overstating what will count, borrowers should assume credit rules may shift and plan for conservative outcomes—especially if they are close to a forgiveness threshold.

Upcoming Phase-Outs

Recent changes instruct administrators to phase out SAVE, PAYE, and ICR by July 1, 2028. Borrowers still in those plans at that time are expected to be moved automatically into the new Repayment Assistance Plan, with certain exceptions for specific loan types such as some parent PLUS consolidations.

Parent PLUS borrowers who want to preserve access to IBR long term generally must:

– Consolidate eligible loans before mid-2026, and

– Enroll in an IDR plan by mid-2028.

Missing these windows could mean losing access to IDR altogether, making this timeline particularly important for families holding parent loans.

Remaining In SAVE

You may have received messages urging you to switch plans, but you are not forced to leave SAVE immediately. Even after interest begins accruing on Aug. 1, 2025, payments are not required until the current payment-pause arrangement ends.

Staying in SAVE for now can give you more time to:

– Watch how court cases and policy changes evolve.

– Build up savings that could help with future payments.

– Evaluate how RAP compares once full details are published.

However, the trade-off is that interest can accumulate while you wait, and you do not earn new qualifying months toward forgiveness unless you move into a plan where payments count.

Mark Kantrowitz, a student aid expert, states, “The drawbacks to consolidation are few and doing so now will preserve your access to an income-driven plan if you need it in the future.”

Waiting For RAP

The Repayment Assistance Plan, expected in 2026, is designed as a long-term replacement for multiple IDR options. Key features include:

– A repayment term of up to 30 years.

– Payments calculated from adjusted gross income, minus a fixed amount per dependent, rather than from discretionary income.

– A minimum monthly payment (for example, 10 dollars), even for very low-income borrowers.

– Waiver of unpaid interest so balances do not balloon when payments are low.

– Small, automatic principal reductions when monthly payments are not large enough to reduce the balance.

Because RAP uses AGI instead of discretionary income, many borrowers—especially those with tight budgets—may find it more expensive month-to-month than existing IBR formulas, even with the interest protections.

How To Choose

Choosing among these paths starts with a few practical questions:

– How close are you to forgiveness under your current or prior plan?

– Is your income likely to rise significantly over the next decade?

– Do you need the lowest possible payment today, or faster exit from debt?

Borrowers who are already fairly close to IDR or Public Service Loan Forgiveness often benefit from switching into IBR and restarting qualifying payments as soon as possible. That approach reduces uncertainty and may shorten the overall time in debt.

Others may prefer to remain in SAVE payment-pause period until a firm end date is announced, then transition into IBR just before payments resume. In the meantime, some choose to set aside the equivalent of a monthly payment in a high-yield savings account or time deposit. That builds a cushion and preserves flexibility while the policy landscape settles.

If you expect to rely on RAP, waiting until it is fully available can help you compare projected payments under RAP and IBR using official calculators. However, remember that in mind that capitalized interest and a longer repayment horizon can quietly increase your total cost over time.

Conclusion

SAVE borrowers are at a crossroads: interest will soon resume, older IDR plans are being reshaped, and RAP is on the horizon. There is no single right move, but there is a right move for your situation—whether that means locking in IBR and moving toward forgiveness, staying in SAVE while you build a financial buffer, or waiting until RAP launches to make a final call. Given your income, job plans, and tolerance for uncertainty, which step will do the most to keep your student loans working for your future instead of against it?